International Business Management - Procter and Gamble - Assignment Example

?  International Business Management Contents Summary 3 Introduction 3 Literature Review 4 Empirical Evidence and Data Analysis 6 Interpretation and Discussion 8 Conclusion 9 Recommendation 10 References 11 Bibliography 13 Summary The competitive advantage is attained by the organizations in the market as a result of the strategies undertaken that are not yet employed by their competitors in the market. Procter and Gamble has been an ideal example of the business houses that have followed the theory of competitive advantage and enjoyed the benefits of sustainable business growth and profitability through the strategies of innovation, differentiation, operational efficiency and cost leadership. The implications of these strategies are recommended to future managers for implementation in the organizational policies for getting competitive advantage in the market. Introduction This assignment is about the position of competitive advantage attained by Procter and Gamble and the study of the various approaches and strategies that have been adopted by the organization to rise to a competitive leadership position in the market. The topic is worth to be studied as it would enable us to validate the theories of the competitive advantage with the real example of Procter and Gamble. The implication of these strategies which are namely innovative strategies, cost leadership strategies, differentiation strategy and operation efficiency could be linked to the recent developments in the business of Procter and Gamble. Due to the innovative strategies, Procter and Gamble has been able to restructure its business process and operations and they have been able to track the demand and needful to be done to meet the customer needs (Barner, 1991, p.102). Along with that operational efficiency has been attained supported by the cost effective production. These features put Procter and Gamble in a relatively superior position in the market which was reflected in increased acceptability of its products that has driven the business growth (Mullen and Stumpf, 1987, p.38). The review of literature on the topic has been presented followed by the detailed analysis and findings on the strategies adopted by Procter and Gamble for gaining competitive advantage. Literature Review The diamond model was proposed by Michael Porter in 1985 which highlights some of the drawbacks of the theory of comparative advantage. According to this theory, the nations and the business houses focus on the growth of productivity for gaining competitive advantage. In order to attain growth in productivity, the cheap labour that is available could be utilized by the forces of production. Figure 1: Diamond Model The model has analysed the notion of competitiveness using six broad factors discussed as follows: Factors conditions include capital resources, physical resources, infrastructure and human resources. The demand conditions prevailing in the domestic market can contribute to create competitiveness for the companies when there is pressure from the domestic buyers to innovate new and differentiated products from that of the competitors. The supporting industries are important for the innovation purposes since they are cost effective and can contribute in the upgrading process whereas the government can contribute to the above determinants by influencing the supply conditions as well as demand conditions. The diamond model reduces the high degree of emphasis on the availability of natural resources inside the geographical boundaries which brings out the limitations of the theory of comparative advantage (Stupmf and Dunbar, 1990, p.22). According to the founder of this theory and many other experts, the competitive advantage could be attained by the organizations due to building up unique capabilities that help them to outperform their competitors (Peteraf, 1993, p.185). The various ways in which the companies have attained competitive advantage in the market are due to the access gained to specialized resources of production. These resources may be in the form of material resources, natural resources, manpower resources, technological resources, etc. These resources may work to the advantage of the entities if these are less expensive or have unique features and qualities. The availability of cheap raw materials, cheap labour and superior technologies may act in favour of the organization that has adopted it. The situation of competitive advantage arises when the companies have adopted the unique attributes to enhance their product quality or service offerings or even increase production volumes beyond the normal level to gain competitive advantage in the market. The companies that have attained the position of competitive advantage have taken informed decisions to use the human resources which are cheaply available, use the natural resources, power and electricity required for production to their advantage and also adopted technologies that have not yet been used by their competitors. The position of competitive advantage has helped the companies in the market to perform better than its competitors. This has led to the acquisition of higher market share of the companies as compared to other players in the market (Clulow, Gerstman and Barry, 2003, p.225). The benefits of competitive advantage have led to profound research and analysis in this field and the designation of strategies that could be adopted for gaining competitive advantage. The strategies for attaining the position of competitive advantage aim to utilize the available resources in an optimal fashion so that the output level of the business functions could be drastically increased. The strategic approach has helped the companies to undertake the right actions to gain competitive advantage in the market. According to the empirical literature, the strategies that are adopted by the companies in order to gain competitive advantage are the cost leadership strategies, differentiation strategies, innovation strategies and operational effectiveness strategies (Rijamampianina, 2003, p.362). The cost leadership strategy is the approach adopted by the companies to offer products and services at relatively lower cost in the market for which the chances of acquiring more number of customers and market share is more. The differentiation strategy has been adopted by companies that have taken the approach of diversification and has been able to offer a wide range of products and services to the customer that the other players in the market have not been to offer. Through innovation strategy, the companies have adopted new technological platforms in order to gain uniqueness and comparative advantage for their products (Lau, 2002, p.127). The companies have also adopted the strategies to improve their operational effectiveness so that the rate of production and the quality of products and services offered are enhanced as compared to the competitors. Empirical Evidence and Data Analysis The empirical evidence of competitive advantage could be witnessed from the business of Procter and Gamble and the various strategies adopted by the company to attain the position of competitive advantage in the market. The analysis of the industry wide information on the business of Procter and Gamble has been given below which highlights the strategies undertaken by the company to reach a position of competitive advantage. Procter and Gamble is a multinational entity that is one of the leading manufacturers of consumer products which sells its products under 300 brands in 180 countries. The developments in the international markets and rapidly changing economics in the international scenario led to increasing demand in the business of pet foods, personal care products and cleaning devices. In the highly competitive world markets coupled with the rising demand, Procter and Gamble went through corporate restructuring and adopted innovative strategies to gain competitive advantage in order to attain sustainable progress in its business. In order to achieve successful operational results in the various international markets, Procter and Gamble leverage on the technological advancements to integrate its business functions at each and every step in order to track the demand level of the economies and then match them with the supply of its products and services. Procter and gamble resorted to Just-in-Time production strategies and inventory control approaches. This increased the operational efficiency of the organization and the logistics and the distribution system performed efficiently by catering to the wholesalers and the retailers (Powell, 2001, p.883). The integration of business mechanism was achieved through direct contact and interface between the business processes and the functions as it was not possible for the employees of different units to exchange ideas and interact face to face. The company resorted to virtual platforms and technological tools. In order to ensure successful implementation of integration of its mechanisms, Procter and Gamble stressed on the approach of knowledge management among its employees. The process of knowledge management made all the employees aware of the new business application tools and the changes implemented in the process in order to gain competitive advantage in the market (Wright, Kroll, Kedia and Pringle, 1990, p. 26). The quick adoption to the changed business structure and processes led to reduction of cost of the business due to which Procter and Gamble could attain the cost leadership position in the market. The offerings of the various personal care products under several brand names in different markets helped Procter and Gamble to achieve differentiation of its products in the competitive market. The differentiation strategy has allowed Procter and Gamble to position themselves as the preferred market players for consumer products. Interpretation and Discussion From the empirical evidence of the strategies adopted by Procter and Gamble, the implications of the strategies could be discussed that allowed the company to attain the position of competitive advantage. In order to tap the potential opportunities in several markets and emerging economies across the world, Procter and Gamble focused on gaining competitive advantage in order to endorse its acceptability among the consumers who have a wide choice of alternatives in the market (Miller, 1992, p. 41). The innovation strategies have offered competitive advantage to Procter and Gamble as the use of new technologies and online mechanisms helped them to get an edge over the competitors who still stuck to traditional business processes. The technology driven business functions helped Procter and Gamble to integrate their business mechanisms (Hambrick, 1983, p. 215). The application of Just-in-Time production helped the organization to track the level of demand and then manipulate the production cycles to match the supply levels. This also allowed the company to control its inventory in an efficient manner. Thus the company was able to reduce the wastes in the production process through optimal utilization of the resources under this newly designed business process that leverage on technology (Murray, 1988, p. 392). By leveraging on technology, Procter and Gamble could put in place an efficient distribution and logistics structure that was only possible through the direct interface of the various business functions through virtual technology platforms implemented in the organization (Wright, 2006, p. 100). This reduced the intermediate process gaps and the efficiency of the supply chain reflected in the increased turnover of business. Procter and Gamble used its brand goodwill and made full use of the differentiation approach in which it marketed it products under various brand names in the countries all over the world (Fulmer, Stumpf and Bleak, 2009, p. 21). The differentiation approach preceded by the strategies of operational efficiency and innovation resulted in effective cost control and the company was able to offer products to the customers at relatively lower prices in the market (Stumpf and Mullen, 1991, p. 45). All these strategies helped Procter and Gamble to attain a position of competitive advantage in the market for which the company enjoyed the benefits of increased market share, huge business turnover, increasing profitability and sustainable business. Conclusion Procter and gamble which is one of the largest manufacturer and seller of the personal care products, pet products and cleaning products has attained the position of competitive advantage with the help of effective strategies undertaken by the management. The application of these strategies is in line with the empirical theory of competitive advantage. The adoption of strategies by Procter and Gamble in the areas of process innovation, product differentiation, cost leadership and operational efficiency could lead us to validate the benefits that could enjoyed through the position of competitive advantage in the market. Due to the innovative strategies and switch over to the technology based business processes, Procter and Gamble was able to integrate its business mechanisms with the several functional areas that enable the company in better tracking and delivery. Procter and Gamble also focused on knowledge management of their employees that allowed the company to reduce the complications of the business process and reduction of operating cost. The overall cost leadership was attained with the help of these strategies helped them to rise to a position of competitive advantage for which Procter and Gamble could offer its customers with a differentiated product portfolio which was increasingly accepted in the market and laid the path for sustainable development. Recommendation The theories of competitive advantage demonstrate the implications of the several strategies of cost leadership, differentiation, innovation and operational efficiency. The policy implications for future managers could be understood with the help of the case study on Procter and Gamble which showed that the company has been able to gain competitive advantage by adoption of the approaches proposed by the empirical theories. It is therefore, recommended for business houses to look for unique resources and technologies that could offer them the position of competitive advantage in the market. In order to get competitive advantage in the market, it is worthwhile for the companies to engage into research and development activities to strategize the adoption of important resources, technology, labour, etc. that would provide them with the benefits of increased business turnover and profitability. References Barner, J. Firm Resources and Sustained Competitive Advantage. Journal of Management. 1991: 17(1), 99-120.  Clulow, V., Gerstman, J. and Barry, C. 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